The food program originated at the U.S. Department of Agriculture; Secretary Tom Vilsack is pictured here. Photo by Jared Strong/Iowa Capital Dispatch.
Editor’s note: This is the third of three guest commentaries by Chuck Johnson, former deputy commissioner of the Department of Human Services, on the subject of fraud in government programs. Read part 1. And, part 2.
The Office of the Legislative Auditor released their review of the Feeding Our Future fraud scandal last summer, and the report set the public narrative: The Minnesota Department of Education could have — and should have — stopped the fraud from happening.
That’s possible. Certainly, the OLA documented gaps in MDE’s oversight of the organization before and during the pandemic.
The scope of the OLA audit was very narrow: MDE’s oversight of one organization (Feeding Our Future) in the summer food service programs. That’s fair; it fits the OLA’s jurisdiction.
But I think it is too limited to set the narrative for the whole Feeding Our Future fraud, which was a very complex set of events involving actors other than MDE.
It makes more sense to consider the fraud scandal in a fuller context, including the role of the federal government, and, perhaps most importantly, the pandemic.
We know from the ongoing prosecutions that there were dozens of organizations involved in the Feeding Our Future fraud. As I wrote previously, echoing some of what Kayseh Magan published earlier this year, these sorts of fraud schemes have proliferated over the past decade.
Even if MDE had shut down the organization named “Feeding Our Future,” it seems very likely other organizations would have perpetuated the fraud anyway. We just would have had a different name for the scandal.
Of course, that’s in part — as the OLA documented — because MDE did not have a robust fraud prevention strategy built around the federal food programs.
That’s a fair criticism but needs context. Prior to the pandemic, these food programs were relatively small federal programs that had not experienced fraud. MDE could have had a comprehensive fraud prevention strategy in place for these programs, but it would have been unusual for a program of that size.
I’d guess the only programs in state government that did have such a structure were the Child Care Assistance Program — the beachhead for these fraud schemes — and Medical Assistance, a $18 billion a year program.
The MDE food programs became ripe for fraud because program spending increased dramatically almost overnight, and the rule changes made it easier for fraudsters to operate.
The decision to expand these programs and loosen the rules was made at the federal level.
Maybe the U.S. Department of Agriculture should have ensured proper controls were in place in all 50 states before they expanded the programs.
If USDA had taken that route, it would have delayed implementation by months. A Harvard-University of Washington study found that the expanded food programs served 1.5 billion meals each month during 2020.
There are trade-offs in every policy choice, and during the pandemic the priority was to ensure children didn’t go hungry.
The OLA also spends a full chapter examining why MDE did not terminate Feeding Our Future in early 2021 using their authority under the “serious deficiency” process.
The OLA’s own timeline makes clear why MDE did not take this action: The FBI started working with MDE in February 2021 and began their criminal investigation in May. If MDE had terminated Feeding Our Future it would have compromised the FBI’s investigation, which depends on observing the fraud in action.
MDE’s seemingly curious inaction during the course of 2021 was almost certainly because they had to cease all administrative actions related to Feeding Our Future while the criminal investigation was ongoing.
It’s not coincidental that on January 20, 2022 — the same day the FBI raided Feeding Our Future and other organizations — MDE terminated Feeding Our Future from the federal food program.
I do wonder why it took so long for the criminal investigation to begin. MDE was in conversation with USDA regarding concerns with Feeding Our Future in the summer of 2020, and elevated those concerns to the USDA Office of Inspector General in the fall of 2020.
I suspect the reason the feds didn’t start earlier was something along the lines of “there was a lot going on in the first months of the pandemic.” I know from our experience during my time at the Department of Human Services that federal agencies were overwhelmed, and state staff struggled with the constant flow of waivers, changed waivers, new guidance, etc. It was a hectic time.
Regardless of timing, the criminal prosecutions and recovery of funds is the only good thing about this terrible crime. The people who committed the fraud are being held accountable.
It is always problematic to go look back at a series of events in the past and try to posit how things would have turned out if a few decisions had been made differently. In this case, knowledge of the horrible outcome — $250 million in funds to feed children stolen — adds another cloud to our judgement.
As someone who lived through the experience of running state government during the pandemic, I see this differently than the OLA: It was a perfect storm.
A pandemic.
Kids who needed access to food while schools were closed.
A small program with limited federal oversight and state administrative capacity, dramatically expanded in a few weeks.
A state agency that lacked the investigative capacity and authority to stop the fraud once they identified it.
A federal agency that did not act quickly when informed of the state’s concerns.
Criminals who sought to exploit the situation to steal money intended to feed children.
The “what ifs” in this sort of scenario are endless.
Is the narrative set by the OLA report wrong? Could MDE have stopped Feeding Our Future? Should they have stopped it?
I’m skeptical. But the OLA is not wrong that many state agencies lack the authority and resources to address fraud.
Fortunately, the governor and Legislature are addressing that, adding inspector generals to agencies and tightening grant requirements.
I recently heard a cyber security expert discussing a disastrous worldwide IT outage. He said, “everyone runs lean until it’s too late.”
Yup. We learn and move forward.